June 25 (Bloomberg) -- Suntory Beverage & Food Ltd. is set
to raise as much as 388.1 billion yen ($3.96 billion) in Japan’s
biggest initial public offering this year after pricing near the
low end of its range as volatile markets curbed demand.

The Tokyo-based soft-drinks unit of Suntory Holdings Ltd.
priced its shares at 3,100 yen each, it said in a regulatory
filing yesterday. That compares with the range of 3,000 yen to
3,800 yen it announced last week for the sale of as many as
125.2 million shares, including over allotment.

Suntory is pricing the IPO after Asian markets have tumbled
on concerns global stimulus will be cut and Japan’s benchmark
Topix index has dropped about 6 percent in the last two months
as Prime Minister Shinzo Abe’s growth strategy disappointed
investors. Companies including Hopewell Hong Kong Properties
Ltd. and Macau Legend Development Ltd. have scrapped or delayed
new stock issues because of poor market conditions.

“We decided the price on the back of a very volatile
market, so it was tough for the IPO,” Suntory Beverage
spokeswoman Tazuko Ikeda said by phone.

Suntory Beverage last week set the widest price range for a
Japan IPO of above $1 billion in at least five years. The share
sale is the North Asian nation’s biggest since Japan Airlines
Co.’s 663 billion yen offering in September, according to data
compiled by Bloomberg. Suntory Beverage is scheduled to list in
Tokyo on July 3.

The benchmark Topix index has lost 7.6 percent since May
29, when the Suntory unit gave its tentative IPO price of 3,800
yen. All the 23 other Japan IPOs this year were priced at the
top of their range, according to data compiled by Bloomberg.

Oversubscription

“I think it’s good timing,” said Mitsushige Akino,
executive director at Ichiyoshi Asset Management Co. in Tokyo.
“The stock price will rise from now so it will be good for
Suntory’s IPO.”

The share sale was more than three times oversubscribed by
domestic investors and almost two times oversubscribed by those
from overseas, said Tetsuo Ichimoto, a spokesman for Suntory
Beverage. Without over allotment, Suntory is selling 119
million shares valued at about 369 billion yen.

Suntory, a household name in Japan, sells brands such as
Orangina soda and plans to use the IPO proceeds to make
acquisitions and strengthen operations. The newly listed unit
plans to double its sales to 2 trillion yen by 2020, it said in
December.

Overseas Acquisitions

A closely held Japanese whiskey and beer maker, parent
Suntory Holdings has focused overseas acquisitions on non-alcohol beverages over the past five years and has set up a
department within the listing unit to explore deals. The alcohol
unit will remain unlisted.

Japanese rivals Asahi Group Holdings Ltd. and Kirin
Holdings Co. have also sought growth overseas as a declining
population damps domestic demand. Suntory had a 20 percent
market share in Japan’s non-alcoholic drink market in 2012, the
second biggest after Coca-Cola Co.’s 28 percent, according to
researcher Inryosoken.

Under the leadership of Nobutada Saji, a grandson of
founder Shinjiro Torii, the family-controlled business has
expanded vigorously outside Japan. The company is known for its
motto ‘Yatteminahare’ or “go for it,” the slogan created by
its founder.

Actor Bill Murray’s character in the 2003 film ’Lost in
Translation’ introduced the name to international filmgoers with
the line, “For relaxing times, make it Suntory time.”

Net income at Suntory Holdings will increase 45 percent to
53 billion yen for the year ending Dec. 31, the company forecast
in February. Nomura Holdings Inc., Morgan Stanley and JPMorgan
Chase & Co. were selected to manage Suntory Beverage’s listing,
the company said.